It's not clear who forcibly sedated her in 1972. It's not certain that she was admitted to a psychiatric ward in the following year. What's definite though is that many people thought she was mad as she ranted about conspiracies in the White House during eccentric phone calls to the press. Questions about Martha Beall Mitchell's sanity were encouraged by the Nixon administration, who consistently briefed against her and probably had her medicated against her will. But ultimately her claims were proven correct when the Watergate scandal broke.

Mitchell was the wife of the US attorney general and saw the planning and cover-up of the Watergate burglaries first-hand. In retrospect, her seemingly paranoid claims made sense and, in her honour, Harvard psychologist Brendan Maher named the Martha Mitchell effect after her to describe the situation where someone is incorrectly diagnosed as delusional but turns out to be right.

But, contrary to popular belief, the relationship between madness and truth is a complex one. They are made out to be strangers but often they are more like distant cousins.

This relationship has recently been acknowledged with the publication of the new version of the psychiatrists' diagnostic manual (the DSM-5) where one of the most interesting but less noticed changes has been the redefinition of the delusion, a symptom that has long been considered the "basic characteristic of madness".

Delusions, in the medical sense, are not simply a case of being mistaken, as the everyday use of the term suggests. They are profound and intensely held beliefs that seem barely swayed by evidence to the contrary – even to the point of believing in the bizarre. My heart has been replaced by steam. My thoughts are being stolen by satellites. The government communicates with me through birdsong.

But many delusions are not outlandishly eccentric, they are simply implausible. Consider the scenario where people believe that their neighbours are conspiring against them or that they are the subject of a film star's secret affections. Occasionally, these beliefs turn out to be true, but this is not a reliable guide to whether someone is delusional or not. This was memorably illustrated by the psychiatrist Andrew Sims, who warned in his psychopathology textbook Symptoms in the Mind that spouses of people with delusions of infidelity may occasionally be driven to infidelity. This romantic betrayal does not suddenly cure their partner of their mental illness.

The general idea is that delusions represent a problem with how you believe – that is, a problem with forming and changing beliefs – not a problem with what you believe. In other words, simply believing something strange or unusual should not be considered a problem but having "stuck" beliefs that are completely impervious to reality suggests something is mentally awry.

On the ground, mental health professionals are often required to decide if someone's thinking indicates a disturbance in their understanding of the world, and this is where the new DSM-5 definition of a delusion may usher in a quiet revolution in psychiatry. No longer are psychiatrists asked to decide whether the patient has "a false belief based on incorrect inference about external reality that is firmly sustained despite what almost everyone else believes and despite what constitutes incontrovertible and obvious proof or evidence to the contrary". A wordy and unhelpful definition that has so many logical holes you could drive a herd of unicorns through it.

Instead, the new definition of delusions describes them as fixed beliefs that are unswayed by clear or reasonable contradictory evidence, which are held with great conviction and are likely to share the common themes of psychosis: paranoia, grandiosity, bodily changes and so on. The belief being false is no longer central and this step forward makes it less likely that uncomfortable claims can be dismissed as signs of madness.

And this is where the larger issue lies. As happened with Martha Mitchell, claims against authorities are often dismissed by suggesting that the person has mental health problems.

History is littered with such examples but sadly there are enough contemporary cases to illustrate the point. In a controversy currently rocking Germany, evidence of money-laundering at a big bank has become a huge scandal, not least because it was dismissed as delusional seven years ago when the accuser was diagnosed with mental illness.

I have no idea whether these people had mental health difficulties but it should have had little bearing on how seriously their concerns were taken. The fact that their claims could be dismissed by allusions to poor mental health is part of the unfortunate stigma that still surrounds the issue. But the stigma goes both ways, and assuming people do not have mental health difficulties because they are correct is the flip side of this.

In the years after Martha Mitchell had been dismissed as delusional, it emerged, contrary to her claims, that she was under the care of her own psychiatrists, drinking heavily and, at times, suicidal. Nixon, for his part, said Watergate would never have happened if it wasn't for Martha. Both believed that mental illness would undermine her credibility. History, however, came down on the side of truth.